Why Everyone is Watching Solana (SOL) Despite Flat Movement

Why Everyone is Watching Solana (SOL) Despite Flat Movement

Posted Tuesday, October 19, 2021 by
Jose Maria Miguel Marquez • 2 min read

Flattish trading in *Solana (SOL) over the past few weeks

Breakout traders are watching Solana very, very closely nowadays, as it tightens and coils further and further. Here’s why: 

    1. Controlled Correction. After the explosive rally from July to September, SOL has pulled-back and consolidated for about two months, trading in a range from 220 to 120. It has never fallen below the critical psychological support of 100. 
    2. Contracting Volatility. Each contraction has shown decreased volatility and trading volume. As seen in the chart above, a total of three contractions have happened since it reached its all-time high. The contractions are getting smaller and smaller each time. 
    3. Selling Supply Slow-down. Aside from the contractions getting smaller, SOL’s trading volume during the same period has slowed down incrementally as well. This could be interpreted like this: the SOL bears may have stopped selling, as there is a lower supply coming into the market.
      Why Everyone is Watching Solana (SOL) Despite Flat Movement
    4. Moving Averages Aligned. On the technical side, short and long-term moving averages have now aligned. This means that the 20-day MA (yellow) is above the 50-day MA (gray), and the 50-day MA is above the 100-day MA (green), and the 100-day MA is above the 200-day MA (purple). This indicates that SOL is on a definite uptrend in all timespans, be it long-term, short-term or mid-term. In most cases, this alignment of moving averages, if sustained, is a common precursor to a strong breakout rally.

All these factors contribute to a common bullish theme for Solana. As such, I reiterate a strong buy rating for SOL, as soon as it breaks out of its current consolidation. Of course, nothing is 100% sure, but at this point, it is do-or-die. A fall below the 50-day moving average or a breakdown below 140 could mean the end of the uptrend for SOL. However, a breakout above 160-170 could mean the start of another leg higher for the coin. 

Trade Idea: Buy the Breakout 

Buy:                          160 – 170

                                  (buy in tranches near this area: 160-170, watch volume – it has to be higher than normal)

Stop Loss:               140 

                                  (careful if it closes below the 50-day moving average, possible breakdown to 100-120 levels) 


Short-term:  180

Mid-term:     200-216 (all-time highs)

VAR:                         1.00 (risk only 1% of your portfolio)

RRR:                         2.00-2.80 

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